Exercise of passport rights by UK firms

Part

SUP Supervision manual

Chapter

Exercise of passport rights by UK firms

Printed on: 06/11/2024

Rulebook at: 28/03/2009

SUP 13

Exercise of passport rights by UK firms

SUP 13.1

Application and purpose

01/12/2004

Application

SUP 13.1.1

This chapter applies to a UK firm, that is, a person whose head office is in the United Kingdom and which is entitled to carry on an activity in another EEA State subject to the conditions of a Single Market Directive. Such an entitlement is referred to in the Act as an EEA right and its exercise is referred to in the Handbook as passporting.

21/06/2001

SUP 13.1.2

This chapter also applies to a UK firm which wishes to establish a branch in, or provide cross border services into, Gibraltar. The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 provides that a UK firm is to be treated as having an entitlement corresponding to its EEA right, to establish a branch in, or provide cross border services into, Gibraltar under any of the Single Market Directives. So, references in this chapter to an EEA State or an EEA right include references to Gibraltar and the entitlement under the Gibraltar Order respectively.

06/10/2006

SUP 13.1.3

This chapter does not apply to:

(1) a firm established in an EEA State other than the United Kingdom; passporting by such a firm in or into the United Kingdom is a matter for its Home State regulator although guidance is given in SUP 13A (Qualifying for authorisation under the Act);

(2) other overseas firms (that is, overseas firms established outside the EEA); such firms are not entitled to passport into another EEA State and, where relevant, may need to obtain authorisation in each EEA State in which they carry on business;

(3) any insurance activity by way of provision of services which is provided by an EEA firm participating in a community co-insurance operation otherwise than as leading insurer; article 26.2 of the Second Non-Life Directive provides that only the leading insurer in such an operation is required to complete any passporting formalities (see also article 11 of the Regulated Activities Order); or

(4) the marketing of a UCITS scheme by its operator in another EEA State under the UCITS Directive (see COLLG 2.1.8 G and CIS 2.3.4 G).

01/02/2006

SUP 13.1.4

SUP App 3 contains guidance on the Single Market Directives.

01/03/2005

Purpose

SUP 13.1.5

This chapter gives guidance on Schedule 3 to the Act for a UK firm which wishes to exercise its EEA right and establish a branch in, or provide cross border services into, another EEA State. That is, when a UK firm wishes to establish its first branch in, or provide cross border services for the first time into, a particular EEA State.

21/06/2001

SUP 13.1.6

The chapter also explains how a UK firm which has already established a branch in, or is providing cross border services into, another EEA State, may change the details of its branch or of the cross border services it is providing: for example, where a UK firm wishes to establish additional branches in an EEA State in which it has already established a branch where this would result in a change to the details provided previously. Such changes are governed by the EEA Passport Rights Regulations.

21/06/2001

SUP 13.2

Introduction

01/12/2004

SUP 13.2.1

This chapter gives guidance to UK firms. In most cases UK firms will be authorised persons under the Act. However, under the Banking Consolidation Directive , a subsidiary of a firm which is a credit institution which meets the criteria set out in that Directive also has an EEA right. Such an unauthorised subsidiary is known as a financial institution. References in this chapter to a UK firm include a financial institution.

21/06/2001

SUP 13.2.2

A UK firm should be aware that the guidance is the FSA's interpretation of the Single Market Directives, the Act and the legislation made under the Act. The guidance is not exhaustive and is not a substitute for firms consulting the legislation or taking their own legal advice in the United Kingdom and in the relevant EEA States.

21/06/2001

SUP 13.2.3

In some circumstances, a UK firm that is carrying on business which is outside the scope of the Single Market Directives has a right under the Treaty to carry on that business. For example, for an insurer carrying on both direct insurance and reinsurance business, the authorisation of reinsurance business is not covered by the Insurance Directives. The firm may, however, have rights under the Treaty in respect of its reinsurance business. Such UK firms may wish to consult with the FSA on their particular circumstances (see SUP 13.12.2 G).

06/03/2009

SUP 13.3

Establishing a branch in another EEA State

01/12/2004

What constitutes a branch

SUP 13.3.1

Guidance on what constitutes a branch is given in SUP App 3 . Note that if a UK MiFID investment firm is seeking to use a tied agent established in another EEA State, the rules in SUP 13 will apply as if that firm were seeking to establish a branch in that EEA State unless the firm has already established a branch in that EEA State (paragraph 20A of Schedule 3 to the Act).

01/11/2007

The conditions for establishing a branch

SUP 13.3.2

A UK firm other than a UK pure reinsurer cannot establish a branch in another EEA State for the first time under an EEA right unless the conditions in paragraphs 19(2), (4) and (5) of Part III of Schedule 3 to the Act are satisfied. It is an offence for a UK firm which is not an authorised person to contravene this prohibition (paragraph 21 of Part III of Schedule 3 to the Act). These conditions are that:

(1) the UK firm has given the FSA, in accordance with the FSA rules (see SUP 13.5.1 R), notice of its intention to establish a branch (known as a notice of intention) which:

(a) identifies the activities which it seeks to carry on through the branch; and
(b) includes such other information as may be specified by the FSA (see SUP 13.5.1 R);

(2) the FSA has given notice (known as a consent notice) to the Host State regulator; and
(3)

(a) if the UK firm's EEA right derives from the Insurance Mediation Directive one month has elapsed beginning on the date on which the UK firm received notice that the FSA had given a consent notice as described in SUP 13.3.6 G (1) (see SUP 13.3.2A G);
(b) in any other case:

(i) the Host State regulator has notified the UK firm (or, where the UK firm is passporting under the Insurance Directives, the FSA) of the applicable provisions or, in the case of a UK firm passporting under MiFID, that the branch may be established; or
(ii) two months have elapsed beginning with the date on which the FSA gave the consent notice.

06/03/2009

SUP 13.3.2A

If the UK firm is passporting under the Insurance Mediation Directive and the EEA State in which the UK firm is seeking to establish a branch has not notified the European Commission of its wish to be informed of the intention of persons to establish a branch in its territory in accordance with article 6(2) of that directive, SUP 13.3.2 G (2) and SUP 13.3.2 G (3) do not apply. Accordingly, the UK firm may establish the branch to which its notice of intention relates as soon as the conditions referred to in SUP 13.3.2 G (1) are satisfied.The list of EEA States that have notified the European Commission of their wish to be informed in accordance with article 6(2) of the Insurance Mediation Directive is published on the FSA's website at www.fsa.gov.uk .

06/02/2007

SUP 13.3.2B

An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may establish a branch in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention in SUP 13.3.2 G (1) should be given to the FSA by the firm on behalf of the appointed representative.

06/02/2007

SUP 13.3.2C

An exempt professional firm which is included in the record of unauthorised persons carrying on insurance mediation activity maintained by the FSA under article 93 of the Regulated Activities Order may establish a branch in another EEA State under the Insurance Mediation Directive (see PROF 7.2).

21/06/2001

SUP 13.3.2D

A tied agent appointed by a MiFID investment firm to carry on investment services and activities (and ancillary services where relevant) does not have its own passporting right to establish a branch in another EEA State. However, a MiFID investment firm remains free to appoint a tied agent to do business in another EEA State and where it does so, the tied agent will benefit from its passport.

06/03/2009

SUP 13.3.2E

Once authorised in the United Kingdom, a UK pure reinsurer has an automatic EEA right to carry on reinsurance business in another EEA State by establishing a branch in that state or providing cross border services into that state. There are no additional requirements to be satisfied before the firm can commence business in that state.

06/03/2009

SUP 13.3.3

Where the UK firm is passporting under the Insurance Directives and the Host State regulator has notified the FSA of the applicable provisions, then under paragraph 19(9) of Part III of Schedule 3 to the Act, the FSA is required to inform the firm of these provisions.

06/03/2009

SUP 13.3.3A

(1) SUP 13.3.3 G does not apply to UK pure reinsurers as they have automatic passport rights on the basis of their Home State authorisation under the Reinsurance Directive.

(2) Under section 3 of Part III of the General Protocol, Home State regulators have agreed to inform Host State regulators if a pure reinsurer for which the Home State is responsible carries on business through a branch in the Host State. Therefore SUP 13.5.1A R requires a UK firm passporting under the Reinsurance Directive to notify the FSA of certain information relating to the branch.

06/03/2009

Issue of a consent notice to the Host State regulator

SUP 13.3.5

(1) If the UK firm's EEA right derives from the Banking Consolidation Directive, MiFID or the UCITS Directive, the FSA will give the Host State regulator a consent notice within three months unless it has reason to doubt the adequacy of a UK firm's resources or its administrative structure. The Host State regulator then has a further two months to notify the applicable provisions (if any) and prepare for the supervision, as appropriate, of the UK firm, or in the case of a MiFID investment firm, to inform the UK firm that a branch can be established.
(2)

(a) If the UK firm's EEA right derives from the Insurance Directives, the FSA will give the Host State regulator a consent notice within three months unless it has reason to:

(i) doubt the adequacy of the UK firm's resources or its administrative structure; or
(ii) question the reputation, qualifications or experience of the directors or managers of the UK firm or its proposed authorised agent;

in relation to the business the UK firm intends to conduct through the proposed branch. The Host State regulator then has a further two months to notify the applicable provisions (if any) and prepare for the supervision, as appropriate, of the UK firm.
(b) In assessing the matters in (2)(a), the FSA may, in particular, seek further information from the firm or require a report from a skilled person (see SUP 5 (skilled persons)).
(c) If the FSA has required a financial recovery plan of a UK firm of the kind mentioned in paragraph 1 of article 38 of the Consolidated Life Directive or paragraph 1 of article 20a of the First Non-Life Directive, the FSA will not give a consent notice for so long as it considers that policyholders are threatened within the meaning of those provisions.
(d) If the UK firm's EEA right derives from the Insurance Mediation Directive and SUP 13.3.2 G (2) applies, the FSA will give the Host State regulator a consent notice within one month of the date on which it received the UK firm's notice of intention. In cases where SUP 13.3.2 G (2) does not apply (see SUP 13.3.2A G), the UK firm may establish a branch as soon as it satisfies the conditions referred to in SUP 13.3.2 G.

01/11/2007

SUP 13.3.6

(1) If the FSA gives a consent notice, it will inform the UK firm in writing that it has done so.
(2) The consent notice will contain, among other matters, the requisite details or, if the firm is passporting under the Insurance Directives, the relevant EEA details (see SUP 13 Annex 1) provided by the UK firm in its notice of intention (see SUP 13.5 (Notices of intention)).

06/02/2007

SUP 13.3.7

(1) If the FSA proposes to refuse to give a consent notice, then paragraph 19(8) of Part III of Schedule 3 to the Act requires the FSA to give the UK firm a warning notice.

(2) If the FSA decides to refuse to give a consent notice, then paragraph 19(12) of Part III of Schedule 3 to the Act requires the FSA to give the UK firm a decision notice within three months of the date on which it received the UK firm's notice of intention (two months in the case of a UK firm which is a UCITS management company). The UK firm may refer the matter to the Tribunal.

(3) For details of the FSA's procedures for the giving of warning notices or decision noticessee DEPP 2 (Statutory notices and the allocation of decision making).

28/08/2007

SUP 13.4

Providing cross border services into another EEA State

01/12/2004

Where is the service provided?

SUP 13.4.1

Guidance on where a cross border service is provided is given in SUP App 3 .

01/03/2005

The conditions for providing cross border services into another EEA State

SUP 13.4.2

A UK firm, other than a UK pure reinsurer, cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from the Insurance Directives, paragraph 20(4B) of Part III of Schedule 3 to the Act. It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the Act). The conditions are that:

(1) the UK firm has given the FSA, in the way specified by FSA rules (see SUP 13.5.2 R), notice of its intention to provide cross border services (known as a notice of intention) which:

(a) identifies the activities which it seeks to carry on by way of provision of cross border services; and
(b) includes such other information as may be specified by the FSA (see SUP 13.5.2 R); and

(2) if the UK firm is passporting under the Insurance Directives, the firm has received written notice from the FSA as described in SUP 13.4.6 G; or
(3) if the UK firm is passporting under the Insurance Mediation Directive and the EEA State in which the UK firm is seeking to provide services has notified the European Commission of its wish to be informed of the intention of persons to provide cross border services in its territory in accordance with article 6(2) of that directive, one month has elapsed beginning with the date on which the UK firm received written notice from the FSA as described in SUP 13.4.5 G (paragraph 20 (3B)(c) of Schedule 3 to the Act).

06/03/2009

SUP 13.4.2A

An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may provide cross border services in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention in SUP 13.4.2 G (1) should be given to the FSA by the firm on behalf of the appointed representative.

06/02/2007

SUP 13.4.2B

An exempt professional firm which is included in the record of unauthorised persons carrying on insurance mediation activity maintained by the FSA under article 93 of the Regulated Activities Order may provide cross border services in another EEA State under the Insurance Mediation Directive (see PROF 7.2).

21/06/2001

SUP 13.4.2C

A tied agent appointed by a MiFID investment firm to carry on investment services and activities (and ancillary services where relevant) does not have its own passporting right to provide cross border services in another EEA State. However, a MiFID investment firm remains free to appoint a tied agent to do business in another EEA State and where it does so, the tied agent will benefit from its passport.

01/11/2007

SUP 13.4.2D

A MiFID investment firm that wishes to obtain a passport for the activity of operating an MTF should follow the procedures described in this chapter. A UK market operator that operates a recognised investment exchange or an MTF and wishes to provide cross border services into another EEA State should follow the procedure described in REC 4.2B.

06/03/2009

SUP 13.4.2E

SUP 13.4.2 G does not apply to UK pure reinsurers as they have automatic passport rights on the basis of their Home State authorisation under the Reinsurance Directive. No notification is required from UK pure reinsurers in respect of the provision of cross border services.

06/03/2009

Issuing a consent notice or notifying the Host State regulator

SUP 13.4.4

(1) If the UK firm's EEA right derives from MiFID, the Banking Consolidation Directive or the UCITS Directive, paragraph 20(3) of Part III of Schedule 3 to the Act requires the FSA to send a copy of the notice of intention to the Host State Regulator within one month of receipt. However, a UK firm passporting under the Banking Consolidation Directive or MiFID may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).
(2)

(a) If the UK firm's EEA right derives from the Insurance Directives, paragraph 20(3A) of Part III of Schedule 3 to the Act requires the FSA, within one month of receiving the notice of intention, to:

(i) give notice in a specified form (known as a consent notice) to the Host State regulator; or
(ii) give written notice to the UK firm of its refusal to give a consent notice and the reasons for that refusal.

(b) The issue or refusal of a consent notice under paragraph 20(3A) of Part III of Schedule 3 to the Act is the consequence of a regulatory decision, and this consent notice (unlike the consent notice for establishment of a branch) is not a statutory notice as set out in section 395 of the Act. A UK firm that receives notice that the FSA refuses to give a consent notice may refer the matter to the Tribunal under paragraph 20(4A) of Part III of Schedule 3 to the Act.
(c) If the FSA has required of a UK firm a financial recovery plan of the kind mentioned in paragraph 1 of article 38 of the Consolidated Life Directive or paragraph 1 of article 20a of the First Non-Life Directive, the FSA will not give a consent notice for so long as it considers that policyholders' rights are threatened within the meaning of those provisions.

(2A)

(a) If the UK firm's EEA right derives from the Insurance Mediation Directive, and the EEA State in which the UK firm is seeking to provide services has notified the European Commission of its wish to be informed of the intention of persons to provide cross border services in its territory in accordance with article 6(2) of that directive, paragraph 20(3B)(a) of Part III of Schedule 3 to the Act requires the FSA to send a copy of the notice of intention to the Host State regulator within one month of receipt. Otherwise, the UK firm may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).
(b) The list of the EEA States that have notified the European Commission of their wish to be informed in accordance with article 6(2) of the Insurance Mediation Directive is published on the FSA's website at www.fsa.gov.uk.

01/11/2007

SUP 13.4.5

When the FSA sends a copy of a notice of intention , or if it gives a consent notice to the Host State regulator, it must inform the UK firm in writing that it has done so (paragraphs 20 (3B)(b) and (4) of Schedule 3 to the Act).

06/02/2007

Applicable provisions for cross border services

SUP 13.4.6

(1) If the UK firm is passporting under the UCITS Directive, then when the Host State regulator receives the notice of intention , it should inform the UK firm of any applicable provisions.

(2) If the UK firm is passporting under the Insurance Directives, then the Host State regulator may notify the FSA if there are any applicable provisions If so, the FSA will inform the UK firm of the applicable provisions.

(3) If a UK firm is not notified of the applicable provisions, it should, for its own protection, take all reasonable steps to determine the applicable provisions for itself.

01/11/2007

SUP 13.5

Notices of intention

01/12/2004

Specified contents: notice of intention to establish a branch

SUP 13.5.1

A UK firm, other than a UK pure reinsurer, wishing to establish a branch in a particular EEA State for the first time under an EEA right must include in its notice of intention given to the FSA:

(1)

(a) the information specified in SUP 13 Annex 1; and

(b) if the UK firm is passporting under the Insurance Directives, the information specified in SUP 13 Annex 2; or

(2) if the UK firm is passporting under the Insurance Mediation Directive, only a statement that it intends to carry on insurance mediation in the State by establishing a branch.

06/03/2009

SUP 13.5.1A

A UK pure reinsurer establishing a branch in a particular EEA state for the first time under the Reinsurance Directive mustnotify the FSA. Whenever possible, this notification must be made as soon as the information specified in SUP 13 Annex 1 R is known by the firm.

06/03/2009

SUP 13.5.1B

SUP 13.5.1 R does not apply to UK pure reinsurers as they have automatic passport rights on the basis of their Home State authorisation under the Reinsurance Directive.

06/03/2009

Specified contents: notice of intention to provide cross border services

SUP 13.5.2

A UK firm wishing to provide cross border services into a particular EEA State for the first time under an EEA right must include, in its notice of intention given to the FSA:

(1) if the UK firm is passporting under MiFID or the Insurance Directives, the information specified in SUP 13 Annex 3;
(2) if the UK firm is passporting under the Banking Consolidation Directive, the activities which it intends to carry on.
(3) if the UK firm is passporting under the Insurance Mediation Directive, only a statement that it intends to carry on insurance mediation in that State by provision of cross border services.

06/03/2009

SUP 13.5.2A

SUP 13.5.2 R does not apply to UK pure reinsurers as they have automatic passport rights on the basis of their Home State authorisation under the Reinsurance Directive .

06/03/2009

SUP 13.5.3

(1) The notice of intention under SUP 13.5.1 R and SUP 13.5.2 R, and the notice required under SUP 13.5.1A R, must be:

(a) given to a member of, or addressed for the attention of, the Authorisation and Approvals Department (Authorisation teams), if submitted with an application for Part IV permission, or the Passport Notifications Unit in any other circumstances; and

(b) delivered to the FSA by one of the methods in (2).

(2) The notice of intention or notice required under SUP 13.5.1A R may be delivered by:

(a) post to the address in (3); or

(b) leaving the application at the address in (3) and obtaining a time-stamped receipt; or

(c) hand delivery to a member of the Authorisation department (if submitted with an application for Part IV permission) or to the Passport Notification Unit; or

(d) electronic mail to the address in (4) if not submitted with an application for Part IV permission and obtaining an electronic confirmation of receipt; or

(e) fax to the Passport Notifications Unit on 020 7066 9798 (if not submitted with an application for Part IV permission ) provided that the FSA receives a copy by one of the methods (a) to (d) above within five business days after the date of the faxed notification; or

(f) online submission via the FSA's website at www.fsa.gov.uk (when available).

(3) The address for notices referred to in (2) is: The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

(4) Email: passport.notifications@fsa.gov.uk

06/03/2009

SUP 13.5.4

A standard form of notice of intention that a UK firm may wish to use is available from the Passport Notifications Unit (see SUP 13.12 (Sources of further information)).

06/03/2009

SUP 13.5.4A

A UK pure reinsurer giving notice as required under SUP 13.5.1A R may wish to use the passporting notification form available on the FSA website (www.fsa.gov.uk/pubs/forms/passporting/branch_eea.doc), adapted as appropriate to reflect the information required by SUP 13 Annex 1 R paragraph 4.

06/03/2009

Unregulated activities

SUP 13.5.5

A notice of intention may include activities within the scope of the relevant Single Market Directive which are not regulated activities (paragraphs 19(3) and 20(2) of Part III of Schedule 3 to the Act), although in the case of a MiFID investment firm a notice of intention may only include ancillary services which are to be carried on with one or more investment services and activities (paragraphs 19(5B) and 20(2A) of Part III of Schedule 3 to the Act). Regulation 19 of the EEA Passport Rights Regulations states that where a UK firm is able to carry on such an unregulated activity in the EEA State in question without contravening any law of the United Kingdom (or any part of the United Kingdom) the UK firm is treated, for the purposes of the exercise of its EEA right, as being authorised to carry on that activity.

01/11/2007

Translations

SUP 13.5.6

(1) A UK firm passporting under the Banking Consolidation Directive, the Insurance Directives or the Reinsurance Directivemay have to submit the requisite details or relevant details in the language of the Host State as well as in English. For a UK firm passporting under the Insurance Directives this translated document will not include the relevant UK details. Further information is available from the Passport Notifications Unit.

(2) A UK firm may wish to discuss with the Passport Notifications Unit the appropriate time for providing the translations in (1), given that further information or clarification of the details provided may be required by the FSA.

(3) A UK firm passporting under the Insurance Directives should keep the EEA and UK relevant details separate as, if the application is approved, only the former will be sent to the Host State regulator.

06/03/2009

Notifications to more than one EEA State

SUP 13.5.7

If a UK firm wishes to establish branches in, or provide cross border services into, more than one EEA State, a single notification may be provided but the relevant information for each EEA State should be clearly identifiable.

06/02/2007

SUP 13.6

Changes to branches

01/12/2004

SUP 13.6.1

Where a UK firm is exercising an EEA right, other than under the Insurance Mediation Directive (see SUP 13.6.9A G) or the Reinsurance Directive (see SUP 13.6.9B R), and has established a branch in another EEA State, any changes to the details of the branch are governed by the EEA Passport Rights Regulations. References to regulations in this section are to the EEA Passport Rights Regulations. A UK firm which is not an authorised person should note that, under regulation 18, contravention of the prohibition imposed by regulation 11(1), 13(1) or 15(1) is an offence. It is a defence, however, for the UK firm to show that it took all reasonable precautions and exercised due diligence to avoid committing the offence.

06/03/2009

SUP 13.6.2

UK firms should note that if a branch in another EEA State ceases to provide services, this may represent a change in requisite details or, if the firm is passporting under the Insurance Directives, the relevant EEA details or relevant UK details.

06/02/2007

SUP 13.6.3

UK firms should also note that changes to the details of branches may lead to changes to the applicable provisions to which the UK firm is subject. These changes should be communicated to the UK firm either by the Host State regulator, or, if the firm is passporting under Insurance Directives, via the FSA authorisations team.

21/06/2001

Firms passporting under the Banking Consolidation Directive and the UCITS Directive.

SUP 13.6.4

If a UK firm has exercised an EEA right, under the Banking Consolidation Directive or the UCITS Directive, and established a branch in another EEA State, regulation 11(1) states that the UK firm must not make a change in the requisite details of the branch (see SUP 13 Annex 1), unless it has satisfied the requirements of regulation 11(2), or, where the change arises from circumstances beyond the UK firm's control, regulation 11(3) (see SUP 13.6.10 G).

01/11/2007

SUP 13.6.5

Where the change arises from circumstances within the control of the UK firm, the requirements in regulation 11(2) are that:

(1) the UK firm has given notice to the FSA and to the Host State regulator stating the details of the proposed change;

(2) the FSA has given the Host State regulator a notice informing it of the details of the change; and

(3) either the Host State regulator has informed the UK firm that it may make the change, or the period of one month beginning with the day on which the UK firm gave the Host State regulator the notice in (1) has elapsed.

06/02/2007

Firms passporting under MiFID

SUP 13.6.5A

If a UK firm has exercised an EEA right to establish a branch under MiFID, it must not make a change in the requisite details of the branch (see SUP 13 Annex 1), use, for the first time, a tied agent established in the EEA State in which the branch is established, or cease to use a tied agent established in the EEA State in which the branch is established, unless it has satisfied the requirements of regulation 11A(2) (see SUP 13.6.5B G).

01/11/2007

SUP 13.6.5B

The requirements of regulation 11A(2) are that:

(1) the UK firm has given a notice to the FSA stating the details of the proposed change; and

(2) the period of one month beginning with the day on which the UK firm gave the notice has elapsed.

01/11/2007

Firms passporting under the Insurance Directives

SUP 13.6.6

If a UK firm has exercised an EEA right under the Insurance Directives and established a branch in another EEA State, regulation 13(1) states that the UK firm must not make a change in the relevant EEA details , unless it has satisfied the requirements of regulation 13(2), or, where the change arises from circumstances beyond the UK firm's control, regulation 13(3) (see SUP 13.6.10 G).

06/02/2007

SUP 13.6.7

Where the change arises from circumstances within the control of the UK firm, the requirements in regulation 13(2) are that:

(1) the UK firm has given notice to the FSA and to the Host State regulator stating the details of the proposed change;

(2) the FSA has given the Host State regulator a notice informing it of the details of the proposed change;

(3) the period of at least one month beginning on the day on which the UK firm gave the FSA the notice in (1) has elapsed; and

(4) either:

(a) a further period of one month has elapsed; or

(b) the FSA has informed the UK firm of any consequential changes in the applicable provisions of which the FSA has been notified by the Host State regulator.

06/02/2007

SUP 13.6.8

If a UK firm has exercised an EEA right under the Insurance Directives and established a branch in another EEA State, regulation 15(1) states that the UK firm cannot make a change in any of the relevant UK details unless the UK firm has given a notice to the FSA stating the details of the proposed change at least one month before the change is effected.

06/02/2007

SUP 13.6.9

Where a UK firm with Part IV permission to carry on both long-term and general insurance business, is passporting under the Insurance Directives and wishes to extend its general insurance business to include long term insurance business (or vice versa), it should complete a new notice of intention and not a change to details notice.

06/02/2007

Firms passporting under the Insurance Mediation Directive

SUP 13.6.9A

A UK firm exercising its EEA right under the Insurance Mediation Directive to establish a branch in another EEA State is not required to supply a change to the details of branches notice .

06/03/2009

Firms passporting under the Reinsurance Directive

SUP 13.6.9B

A UK firm exercising its EEA right under the Reinsurance Directive to establish a branch in another EEA State must notify the FSA of any changes in the information specified in SUP 13 Annex 1 R. Whenever possible, this notification must be made as soon as the change in information is known by the firm.

06/03/2009

Changes arising from circumstances beyond the control of a UK firm

SUP 13.6.10

(1) If the change arises from circumstances beyond the UK firm's control, the UK firm:

(a) is required by regulation 11(3) or regulation 13(3) to give a notice to the FSA and to the Host State regulator stating the details of the change as soon as reasonably practicable;
(b) may, if it is passporting under the Insurance Directives, make a change to its relevant UK details under regulation 15(1) if it has, as soon as practicable (whether before or after the change), given notice to the FSA stating the details of the change.

(2) The FSA believes that for a change to arise from circumstances beyond the control of a UK firm, the circumstances should be outside the control of the firm as a whole and not just the branch in the EEA State.
(3) Neither this guidance nor that set out at SUP 13.6.4 G or SUP 13.6.5 G is applicable to MiFID investment firms.

01/11/2007

The process

SUP 13.6.11

When the FSA receives a notice from a UK firmother than a MiFID investment firm(see SUP 13.6.5 G (1) and SUP 13.6.7 G (1)) ora pure reinsurer (see SUP 13.6.9B R) it is required by regulations 11(4) and 13(4) to either refuse, or consent to the change within a period of one month from the day on which it received the notice.

06/03/2009

SUP 13.6.12

If the FSA consents to the change, then under regulations 11(5) and 13(5) it will:

(1) give a notice to the Host State regulator informing it of the details of the change; and

(2) inform the UK firm that it has given the notice, stating the date on which it did so.

21/06/2001

SUP 13.6.13

If a UK firm is passporting under the Banking Consolidation Directive, then regulation 11(7) states that the FSA may not refuse to consent to a change unless, having regard to the change and to the EEA activities the UK firm is seeking to carry on, it doubts the adequacy of the administrative structure or the financial situation of the UK firm. In reaching its determination, the FSA may have regard to the adequacy of management, systems and the presence of relevant skills needed for the EEA activities to be carried on.

01/11/2007

SUP 13.6.14

If a UK firm is passporting under the Insurance Directives, then regulation 13(7) states that the FSA may not refuse to consent to a change unless, having regard to the change, the FSA has reason:

(1) to doubt the adequacy of the UK firm's administrative structure or financial situation; or

(2) to question the reputation, qualifications or experience of the directors or managers of the firm or the authorised agent;

in relation to the business conducted, or to be conducted, through the branch.

21/06/2001

SUP 13.6.15

If the FSA refuses to consent to a change, then under regulations 11(6) and 13(6):

(1) the FSA will give notice of the refusal to the UK firm, stating its reasons and giving an indication of the UK firm's right to refer the matter to the Tribunal and the procedures on such a reference; and

(2) the UK firm may refer the matter to the Tribunal.

28/08/2007

SUP 13.6.16

UK firms may wish to use the standard form available from the Passport Notifications Unit (see SUP 13.12 (Sources of further information)) to give the notices to the FSA described in SUP 13.6.5 G (1), SUP 13.6.5B G, SUP 13.6.7 G (1), SUP 13.6.8 G and SUP 13.6.10 G (1).

01/11/2007

The process: MiFID investment firms

SUP 13.6.17

When the FSA receives a notice from a UK MiFID investment firm (see SUP 13.6.5BG (1)), it is required by regulation 11A(3) to inform the relevant Host State regulator of the proposed change as soon as reasonably practicable. The firm in question may make the change once the period of one month beginning with the day on which it gave notice has elapsed.

01/11/2007

SUP 13.7

Changes to cross border services

01/12/2004

SUP 13.7.1

Where a UK firm is exercising an EEA right under the UCITS Directive, MiFID or the Insurance Directives and is providing cross border services into another EEA State, any changes to the details of the services are governed by the EEA Passport Rights Regulations. References to regulations in this section are to the EEA Passport Rights Regulations. A UK firm which is not an authorised person should note that contravention of the prohibition imposed by regulation 12(1), 12A(1) or 16(1) is an offence. It is a defence, however, for the UK firm to show that it took all reasonable precautions and exercised due diligence to avoid committing the offence.

01/11/2007

SUP 13.7.2

UK firms should also note that changes to the details of cross border services may lead to changes to the applicable provisions to which the UK firm is subject.

21/06/2001

Firms passporting under the UCITS Directive

SUP 13.7.3

If a UK firm is passporting under the UCITS Directive, regulation 12(1) states that the UK firm must not make a change in its programme of operations, or the activities to be carried on under its EEA right, unless the relevant requirements in regulation 12(2) have been complied with. These requirements are:

(1) the UK firm has given a notice to the FSA and to the Host State regulator stating the details of the proposed change; or

(2) if the change arises as a result of circumstances beyond the UK firm's control, the UK firm has as soon as practicable (whether before or after the change) given a notice to the FSA and to the Host State regulator, stating the details of the change.

UK firms may wish to use the standard form available from the Passport Notifications Unit (see SUP 13.12 (Sources of further information)) to give the notices to the FSA required by SUP 13.7.3 G (1) and SUP 13.7.3A G.

01/11/2007

Firms passporting under MiFID

SUP 13.7.3A

If a UK firm is providing cross border services in a particular EEA State in exercise of an EEA right deriving from MiFID, the UK firm must comply with the requirements of regulation 12A(2) before it makes a change to its programme of operations, including:

(1) changing the activities to be carried on in exercise that EEA right;

(2) using, for the first time, any tied agent to provide services in the territory of that EEA State; or

(3) ceasing to use any tied agent to provide services in the territory of that EEA State.

01/11/2007

SUP 13.7.3B

The requirements of regulation 12A(2) are that:

(1) the UK firm has given notice to the FSA stating the details of the proposed change; and

(2) the period of one month beginning with the day on which the UK firm gave the notice mentioned in (1) has elapsed.

01/11/2007

Firms passporting under the Insurance Directives

SUP 13.7.4

If a UK firm has exercised an EEA right under the Insurance Directives and is providing cross border services into another EEA State, regulation 16(1) states that the UK firm must not make a change in the relevant details (as defined in regulation 17 - see also SUP 13 Annex 3) unless the relevant requirements in regulation 16(3) or, where the change arises from circumstances beyond the UK firm's control, regulation 16(4), have been complied with.

06/02/2007

SUP 13.7.5

Regulation 16(3) provides that:

(1) the UK firm has given a notice to the FSA stating the details of the proposed change; and

(2) the FSA has given the Host State regulator a notice informing it of the details of the proposed change.

21/06/2001

SUP 13.7.6

If the change arises from circumstances beyond the UK firm's control, the UK firm is required by regulation 16(4) to give a notice to the FSA stating the details of the change as soon as reasonably practicable (whether before or after the change). See also SUP 13.6.10 G(2), as relevant to cross border services.

21/06/2001

SUP 13.7.6A

UK firms may wish to use the standard form available from the Passport Notifications Unit(see SUP 13.12 (Sources of further information)) to give the notices to the FSA as described in SUP 13.7.3 G (1), SUP 13.7.3A G, SUP 13.7.3B G, SUP 13.7.5 G (1) and SUP 13.7.6 G.

01/11/2007

SUP 13.7.7

When the FSA receives a notice from a UK firm (see SUP 13.7.5 G (1) and SUP 13.7.6 G), it is required by regulations 16(5) toeither refuse or consent to the change within one month of receipt.

01/11/2007

SUP 13.7.8

If the FSA consents to the change it will:

(1) give a notice to the Host State regulator informing it of the details of the proposed change; and

(2) inform the UK firm that it has given the notice, stating the date on which it did so.

21/06/2001

SUP 13.7.9

If the FSA refuses to consent to a change it is required by regulation 16(7) to give notice of the refusal to the UK firm, stating its reasons and giving an indication of the UK firm's right to refer the matter to the Tribunal and the procedures that apply to such a reference.

28/08/2007

SUP 13.7.10

Where a UK firm with Part IV permission to carry on both long-term and general insurance business is passporting under the Insurance Directives and wishes to extend its general insurance business to include long term insurance business (or vice versa), it should complete a new notice of intention and not a change to details notice.

06/02/2007

Firms passporting under the Banking Consolidation Directive and Insurance Mediation Directive

SUP 13.7.11

A UK firm providing cross border services under the Banking Consolidation Directive or Insurance Mediation Directive is not required to supply a change to the details of cross border services notice.

06/03/2009

Firms passporting under the Reinsurance Directive

SUP 13.7.12

A UK firm providing cross border services under the Reinsurance Directive is not required to supply notification of, or a change to the details of, its cross border services.

06/03/2009

SUP 13.8

Changes of details: provision of notices to the FSA

01/12/2004

SUP 13.8.1

(1) A notice of a change to a branchreferred to in SUP 13.6.5 G (1), SUP 13.6.5BG (1), SUP 13.6.7 G (1) , SUP 13.6.8 G, SUP 13.6.9B R and SUP 13.6.10 G (1) and a notice of a change to cross border servicesreferred to in SUP 13.7.3 G (1) , SUP 13.7.3AG (1), SUP 13.7.5 G (1) and SUP 13.7.6 G must be:

(a) given to a member of, or addressed for the attention of, the Passport Notifications Unit; and

(b) delivered to the FSA by one of the methods in (2).

(2) The notice may be delivered by:

(a) post to the address in (3); or

(b) leaving the application at the address in (3) and obtaining a time-stamped receipt; or

(d) electronic mail to the address in (4) and obtaining an electronic confirmation of receipt; or

(e) fax to the Passport Notifications Unit on 020 7066 9798 provided that the FSA receives a copy by one of the methods (a) to (d) above within five business days after the date of the faxed notification; or

(f) online submission via the FSA's website at www.fsa.gov.uk (when available).

(3) The address for notices is: The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

(4) Email: passport.notifications@fsa.gov.uk

06/03/2009

SUP 13.8.2

UK firms passporting under the Banking Consolidation Directive or the Insurance Directives may be required to submit the change to details notice in the language of the Host State as well as in English.

06/02/2007

SUP 13.10

Applicable provisions

01/12/2004

SUP 13.10.1

UK firms are reminded that conduct of business rules, and other rules made for the general good, may apply to business carried on in the Host State by a UK firm. These are known in the Act as the applicable provisions (paragraph 19(13) of Part III of Schedule 3 to the Act).

21/06/2001

SUP 13.10.2

UK firms passporting under the Banking Consolidation Directive should note that, under the Directive, the Host State is responsible, together with the FSA , for monitoring the liquidity of a branch established by a UK firm in another EEA State.

21/06/2001

SUP 13.10.3

These Host State provisions often have requirements about the soliciting of business, for example, advertising and cold-calling rules. A UK firm should ensure it is familiar with, and acts in compliance with, the relevant requirements of its Host State regulator.

21/06/2001

SUP 13.11

Record keeping

01/12/2004

SUP 13.11.1

(1) A UK firm which is exercising an EEA right must make and retain a record of:

(a) the services or activities it carries on from a branch in, or provides cross-border into, another EEA State under that EEA right; and

(b) the details relating to those services or activities (as set out in SUP 13.6 and SUP 13.7).

(2) The record in (1) must be kept for five years (for firms passporting under MiFID) or three years (for other firms)from the earlier of the date on which:

(a) it was superseded by a more up-to-date record; or

(b) the UK firm ceased to have a branch in, or carry on cross border services into, any EEA State under an EEA right.

01/11/2007

SUP 13.11.2

The record in SUP 13.11.1 R need not relate to the level of business carried on. A UK firm may comply with SUP 13.11.1 R by, for example, keeping copies of all notices of intention and change to details notices.

06/02/2007

SUP 13.11.3

A UK firm should monitor the business carried on under an EEA right to ensure that any changes to details are notified as required by SUP 13.6 (Changes to branches) and SUP 13.7 (Changes to cross border services).

06/02/2007

SUP 13.12

Sources of further information

01/12/2004

SUP 13.12.1

(1) Given the complexity of issues raised by passporting, UK firms are advised to consult legislation and also to obtain legal advice at earliest opportunity. Firms are encouraged to contact their usual supervisory contact at the FSA to discuss their proposals. However, a UK firm which is seeking guidance on procedural or notification issues relating to passporting should contact the Passport Notifications Unit.

(2) An applicant for Part IV permission which is submitting a notice of intention with its application for such permission should contact the Permissions department (020 7066 3954) in the first instance.

06/10/2007

SUP 13.12.2

To contact the Passport Notifications Unit, from which a standard form of notice of intention can be obtained:

(1) telephone on 020 7066 1000; fax on 020 7066 9798; or

(2) write to: The Passport Notifications Unit, The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS; or

(3) Email: passport.notifications@fsa.gov.uk

06/02/2007

SUP 13 Annex 1

Requisite details: branches R

01/12/2004

Type of firm

Requisite details (see notes 1 & 2)

Credit institution

(a)

particulars of the programme of operations carried on, or to be carried on, from the branch, including a description of the particular EEAactivities to be carried on, and of the structural organisation of the branch;

(b)

the address in the EEA State in which the branch is, or is to be, established from which information about the business may be obtained; and

(c)

the names of the managers of the branch.

MiFID investment firm

(a)

The EEA States within the territory of which the UK firm plans to establish a branch;

[Note: Article 32(2)]

(b)

the programme of operations to be carried on from the branch , including a description of the investment services and activities and ancillary activities to be carried on and of the structural organisation of the branch;

(c)

the address in the EEA State in which the branch is to be established from which information about the business may be obtained;

(d)

the names of the managers of the branch ; and

(e)

whether the branch intends to use tied agents.

UCITS management company

The information required under 1 above, plus: the EEA State within the territory of which the UCITS management company plans to establish a branch;

Insurance undertaking

(1) (a)

the address of the branch;

(b)

the name of the UK firm's authorised agent (see note 3) and, in the case of a member of Lloyd's, confirmation that the authorised agent has power to accept service of proceedings on behalf ofLloyd's;

(c)

the classes or parts of classes of business carried on, or to be carried on, and the nature of the risks or commitments covered, or to be covered, in the EEA State concerned;

(d)

details of the structural organisation of the branch;

(e)

the guiding principles as to reinsurance of business carried on, or to be carried on, in the EEA State concerned, including the firm's maximum retention per risk or event after all reinsurance ceded ;

(f)

estimates of:

(i)

the costs of installing administrative services and the organisation for securing business in the EEA State concerned;

(ii)

the resources available to cover those costs; and

(iii)

if contracts of a kind falling within paragraph 18 of Schedule 1 to the Regulated Activities Order (assistance) are, or are to be, effected or carried out, the resources available for providing assistance;

(g)

for each of the first three years following the establishment of the branch:

(i)

estimates of the firm's margin of solvency and the margin of solvency required and the method of calculation;

(ii)

if the firm carries on, or intends to carry on, business comprising the effecting or carrying out of contracts of long-term insurance, the details mentioned in paragraph (2) as respects the business carried on, or to be carried on, in the EEA State concerned; and

(iii)

if the firm carries on, or intends to carry on, business comprising the effecting or carrying out of contracts of general insurance, the details mentioned in paragraph (3) as respects the business carried on, or to be carried on, in the EEA Stateconcerned;

(h)

if the firm covers, or intends to cover, relevant motor vehicle risks, details of the firm membership of the national bureau and the national guarantee fund in the EEA State concerned; and

(i)

if the firm covers, or intends to cover, health insurance risks, the technical bases used, or to be used, for calculating premiums in respect of such risks .

(2)

The details referred to in (1)(g)(ii) are:

(a)

the following information, on both optimistic and pessimistic bases, for each type of contract or treaty:

(i)

the number of contracts or treaties expected to be issued;

(ii)

the total premium income, both gross and net of reinsurance ceded;

(iii)

the total sums assured or the total amounts payable each year by way of annuity ;

(b)

detailed estimates, on both optimistic and pessimistic bases, of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions; and

(c)

estimates relating to the financial resources intended to cover underwriting liabilities.

(3)

The details referred to in (1)(g)(iii) are:

(a)

estimates relating to the expenses of management (other than the costs of installation), and in particular those relating to current general expenses and commissions;

(b)

estimates relating to premiums or contributions (both gross and net of all reinsurance ceded) and to claims (after all reinsurance recoveries); and

(c)

estimates relating to the financial resources intended to cover underwriting liabilities .

Pure reinsurer

(a)

the address of the branch;

(b)

the name of the firm's authorised agent (see note 3);

(c)

whether the firm will be, or is, carrying on life or non-life reinsurance business, or both;

(d)

confirmation that the firm fulfils the solvency requirements of the Reinsurance Directive.

Notes

Note 1: The requisite details or relevant details specified in this annex are those in the EEA Passport Rights Regulations; that is, those in regulation 1 for credit institutions and MiFID investment firms, and those in regulation 14 for insurance undertakings. The relevant details specified for pure reinsurers are those in the General Protocol, under which Home State regulators have agreed to inform Host State regulators if a pure reinsurer carries on business through a branch in the Host State.
Note 2: In this table, the references to classes of insurance have the meaning given to them in Schedule 1 to the Regulated Activities Order.
Note 3: For the purposes of this table, 'authorised agent' means an agent or employee of the insurance undertaking who has authority (a) to bind the insurance undertaking in its relations with third parties, and (b) to represent the insurance undertaking in its relations with overseas regulators and courts in the EEA States of the branch.

06/03/2009

SUP 13 Annex 2

Relevant UK details: branches of insurance undertakings R

01/12/2004

Relevant UK details

(1)

the names of the UK firm's managers and main agents in the EEA State concerned;

(2)

particulars of any association which exists or is proposed to exist between:

(a)

the directors and controllers of the UK firm;

(b)

any person who will act as insurance broker, agent, loss adjuster or reinsurer for the UK firm in the EEA State concerned;

(3)

the names of the principal reinsurers of business to be carried on in the EEA State concerned;

(4)

the sources of business in the EEA State concerned (for, example, insurance brokers, agents, own employees or direct selling) with the approximate percentage expected from each of these sources;

(5)

copies or drafts of:

(a)

any separate reinsurance treaties covering business to be written in the EEA State concerned;

(b)

any standard agreements which the UK firm will enter into with brokers or agents in the EEA State concerned;

(c)

any agreements which the insurance undertaking will enter into with persons (other than employees of the UK firm) who will manage the business to be carried on in the EEA State concerned;

(6)

in the case of a UK firm which intends to carry on long-term business:

(a)

the technical bases which the actuary appointed in accordance with SUP 4.3.1 R proposes to use for each class of business to be carried on in the EEA State, including the bases needed for calculating premium rates and mathematical reserves;

(b)

a statement by the actuary so appointed whether he considers that the premium rates which will be used in the EEA State concerned are suitable;

(c)

a statement by that actuary whether he agrees with the information provided under relevant EEA details (1)(e) and (2)(b) and (c);

(d)

the technical bases used to calculate the statements and estimates referred to in relevant EEA details (2); and

(7)

in the case of a UK firm which intends to carry on general business, copies or drafts of any agreements which the UK firm will have with main agents in the EEA State concerned.

01/11/2004

SUP 13 Annex 3

Specified information: Cross Border Services

01/03/2005

Type of firm

Specified information

MiFID investment firm

(a)

The EEA State in which the UK firm intends to operate.

(b)

Details of the programme of operations, stating in particular the investment services and activities and the ancillary services which it intends to perform.

(c)

Whether the UK firm intends to use tied agents in the territory of the EEA State in which the UK firm intends to operate.

UCITS management company

(a)

The information required under 1 above ; and:

(b)

the EEA State within the territory of which the UCITS management company plans to operate.

Insurance undertaking (note 1)

(a)

T he EEA State in which the EEA activities are carried on, or are to be carried on;

(b)

the nature of the risks or commitments covered, or to be covered, in the EEA State concerned;

(c)

if the firm covers, or intends to cover, relevant motor vehicle risks (note 2):

(i)

the name and address of the claims representative (note 3); and

(ii)

details of the firm's membership of the national bureau and the national guarantee fund in the EEA State concerned (if required by the EEA State concerned as part of the consent notice ) ; and

(d)

if the insurer covers, or intends to cover, health insurance, the technical bases used, or to be used, for calculating premiums in respect of such risks .

MiFID investment firm wishing to operate an MTF

(a)

The EEA State in which arrangements are to be made.

(b)

A description of the arrangements the firm wishes to make.

Note 1: See regulation 17 of the EEA Passport Rights Regulations

Note 2: In this table, the reference to 'relevant motor risks' has the meaning given to motor vehicle liability in Schedule 1 to the Regulated Activities Order.

Note 3: In this table, the reference to 'claims representative' has the meaning given to it in the EEA Passport Rights Regulations.

01/11/2007